A new report has found that Bulgaria has the highest level of direct foreign investment to GDP in the entire Central and Eastern European region, helping to defy a decline in the sector throughout the CEE region.

The analysis by European bank group Unicredit, revealed that the country’s index for investment this year alone was just under 10 per cent, with the figure expected to grow with the country being granted EU membership from 1 January 2007.

The group added that the country with the second highest investment was fellow EU newcomer Romania, with a 6.5 per cent index, signalling a possible resurgence in food and beverage manufacturing.

The news will be welcomed by the food industry in the country and the wider region which has been experiencing widespread decline.

In the five years to 2005, restructuring, automation and offshoring has resulted in the loss of about 89,000 jobs in the EU’s food manufacturing sector, with recent industry announcements indicating the downward trend toward decreasing employment — and production — is continuing, according to a report from the European Foundation for the Improvement of Living and Working Conditions.

In both the original EU15 member states and the 10 new entrants, the manufacture of food, textiles and wearing apparel are among the top 10 losers of job positions during the five year period to the end of 2005.

The fortunes of the food industry are following the general decline in manufacturing jobs within the bloc. Between 2000 and 2005, employment shares by economic sector continued to show the long-term trend of economic shifts out of the primary and manufacturing sectors and into the service sectors, the foundation notes.

Bulgaria however appears to be defying this trend, with investors making the most of growing GDP and other free market reforms being offered by the country’s accession to the EU.

With Bulgaria’s economic growth for 2007 estimated to reach 5.5 per cent, companies are already looking to benefit from the growing markets offered by the country.

Sammi Sound Tech., which normally manufacturers loud speakers, said it would build a factory in Bulgaria to manufacture traditional Korean spaghetti.

A big share of the production is expected to be directed at the EU market. The € 30m factory is expected to employ 300 workers and be in operation at the end of autumn 2007.

The firm will join a growing number of food companies currently operating in the country, which include food giants like Nestle and Kraft Foods, as well as major brewers like Carlsberg, and Inbev.